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September 20, 2012

FinCEN recently announced that it would hold the second in a series of outreach events on the advanced notice of proposed rulemaking (ANPR) published in March 2012 on customer due diligence (CDD) and beneficial ownership requirements for financial institutions. FinCEN is seeking further clarification on a number of issues and to engage with representatives from affected financial institutions on these issues at the roundtable discussion.

The roundtable discussion is scheduled for September 28, 2012 at the U.S. Commodity Futures Trading Commission offices in Chicago, Illinois. The morning session (9:00 a.m. to 12:00 p.m. Central time) is for futures commission merchants and introducing brokers; the afternoon session (1 p.m. to 4 p.m. Central time) is for all other interested financial institutions. Requests to attend the roundtable are due by September 21.

FinCEN is specifically seeking clarification and examples on a number of issues related to the CDD ANPR, including but not limited to the following: current practices to obtain and verify beneficial ownership information; costs associated with obtaining and verifying beneficial ownership information; alternative definitions for the term “beneficial owner;” how identifying beneficial owners enhances a financial institution’s ability to manage risk as well as when beneficial ownership information may not be relevant in managing risk; how financial institutions might assess risk in determining whether to obtain or verify beneficial ownership information; for intermediated accounts, mitigating risks associated with a customer’s underlying clients; due diligence on trust accounts; differences in obtaining beneficial ownership information for foreign legal entity customers compared to domestic entities; and whether and how financial institutions identify legal entity customers are “shell companies.”

FinCEN has also released a summary of its first hearing on the CDD ANPR held July 31 together with copies of the prepared remarks presented at the hearing. Those materials, as well as a Webcast of a portion of the hearing, are available here.